Are your financial concerns adding up?

Drowning in Debt? Baffled by Budgets?

According to the Bank of England, the amount of consumer debt within the UK now exceeds £1,409bn. Of this, £1,185.3bn was secured on dwellings and £223.7bn was consumer credit (e.g. credit cards; unsecured loans).  More on these figures are available from the Bank of England.

These worrying statistics may prove speculation that Britons are accumulating debt at a faster rate than consumers in the US and many European countries. 

Where do you fit in?

Whilst you may not fit exactly with these national averages, you may still have financial concerns of your own. A good way to see if you could be facing money problems, now or in the future, is to try this simple calculation:

  • Add up all your debts, excluding your mortgage; i.e. bank loans, store cards, credit cards, HP agreements.
  • If the total is less than 50% of your annual net income then the debts should be manageable, providing you have a robust budget and settlement plan.
  • If the sum is more than 50% you may be storing up problems for the future.

In either case it’s best to be aware of your financial situation and to make provision for paying off your debts, whatever their size.

Managing a budget

Budgeting is the single most important thing you can do to contribute towards your financial health. Creating a budget will give you an accurate Budget your way to financial freedompicture of your financial position and it may well show that your money is not being spent in the right way. It will also help you to see what you need to change and where savings can be made.

Budgets are sometimes viewed as only for those who are financially burdened.  However, budgets can be beneficial to everyone, regardless of age or financial status.  Many people are ignorant of their spending habits - all they know is that their money is gone by the end of the month, if not before.  This is when credit facilities such as overdrafts, store cards and credit cards are most likely to be used, plunging you further into debt. A planned, well-thought out budget will educate you as to where your money goes each month, identify potential problem areas, and help you plan for unexpected emergencies. Also, people tend to spend less when they track how much they spend and are surprised at how quickly it adds up.

Sticking to a budget isn't always easy, but it really is the only way to optimum financial health. It is normal to get frustrated with being on a budget and spending wisely, but with a little self-control and perseverance financial freedom can become a habit.

Getting help

If you could use a little help in getting to grips with your budget, a LifeWorks consultant can help. They can suggest a step-by-step plan to help you review your finances and adjust your spending habits. LifeWorks also offers a free publication, which can help you to analyse your current financial situation and develop a plan of your own.

Contact us today to find out more about how our LifeWorks service can help you and your employees.

It’s important to recognise that making a small change to your spending today can help towards a brighter financial future. Imagine what you could do with your money if you were debt free!

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